Turmoil, mayhem, stampede, Armageddon, bloodbath – the lexicon of meltdown was soon exhausted. With the stock market falling for nine of the last 10 days, British shares lost heavily, alongside most of the world. As alarming comparisons are made to the August 2007 start of the great crunch, markets hold their breath over the weekend – is this nearing the double dip?

Despite the easing of panic with better-than-expected US jobs figures on Friday, the earthquake rumbles on beneath the eurozone and the more you look, the harder it is to see where growth or exports are coming from. Economists point to alarming signs of a 1930s reprise, as countries play beggar-my-neighbour.

If another mighty slab of the nation's wealth is about to be swept away in the global storm, what does it mean for us? Look at the options. Politically, David Cameron and George Osborne will be faced with the same dilemmas as Gordon Brown and Alistair Darling – only worse, because they will have fewer weapons in their armoury the second time round. Pause briefly to gloat as they find out what it feels like to have to bail out banks and watch the automatic stabilisers push up deficits as receipts to the Treasury slump. Their bleating that this is a global crisis not of their making will precisely echo Brown's plea that it was not he who crashed Lehman's bank. But stop right there with the schadenfreude, wish no ill. This would be terrible for millions of people.

A second wave crashing in on a weak economy would bring another round of company failures, high street closures and huge job losses. Companies that tried to hold on to staff would have to let many go while the public sector still has many jobs to shed. Wages would fall even further behind inflation. As ever the young people suffer most, the near million already out of work joined by this summer's school and college leavers: another 200,000 A-level students are predicted not to find university places this month.

So what lessons would be learned from how we faced the last crunch? One country can't avoid a global virus, but would the chancellor and the governor of the Bank of England at least do all they can? Already, examining the UK's flatlining economy, the International Monetary Fund has called this week for more quantitative easing, essentially the Bank printing money. But will it be done as badly as before? The Bank's own research shows it can't track where the money went or what effect it had. Once it was paid through the banks, it vanished into the great financial casino and not into the real economy. This time, the Bank could, as the economist Lord Skidelsky suggests, put the money into an infrastructure bank, or, as others suggest, into regional industrial banks, or a green investment bank, any of which would invest in production, jobs and projects of lasting economic value.

Faced with a new crisis, it stretches credibility to imagine Osborne invoking the spirit of Roosevelt's New Deal, but that's what's needed, with a job guarantee for every young person. That investment would be every bit as cashable for the future as roads or railways, since the great social debt now accumulating will be more burdensome for future generations than mere financial debt. No one is counting the social deficit, the costly damage done to this generation of young people, though the evidence shows that a workless youth does life-long harm, some never finding their feet again, becoming the workless parents of the next generation.

If things turn even worse, does the country want to share the pain as it has so far? Surely not. Another slashing of living standards for those on average and below incomes can't happen again. Nor can the north be battered again while the south-east sits pretty. In London, for those in good jobs, the opinion-formers and the deciders, they see, hear, feel no crisis anywhere near them. It lacks reality, except in numbers on balance sheets. When the king of the "feral elite", Bob Diamond, head of Barclays, on a £6.5m bonus, called this week for the chancellor to hold firm on austerity, you wonder how he gets the words out without choking.

It's not just the bankers: chief executives of the FTSE 100 saw their median pay rise by 32% this year, similar to most years. Meanwhile, this week the Chartered Institute of Personnel and Development reported that only one in four workers had any pay rise this year, while one in 20 had a pay cut, with most public sector pay frozen. Food prices rose 5% in the year, with energy prices soaring. With half the population having seen no rise in income since 2003, the Resolution Foundation says average pay will be no higher in 2015 than it was in 2001.

If you assumed, as I did, that this week's grim forecasts would banish any question of cutting the top tax rate, think again. Incredibly, Osborne is dropping even stronger hints of a top tax cut next April. A Treasury analysis says that, while it brings in an extra £2.4bn from earners over £150,000, to bring the rate down to 45p would reduce revenue by "only" £750m. That's because, they say, at 50p so many of the highest earners dodge tax, or put extra into (state-subsidised) pensions, or stash their cash off-shore.

Flat-tax rightwingers are plugging the weary old Laffer curve, claiming that the 50p rate brings in less than a lower rate would, because of tax avoidance. But read the research and most experts say revenues don't fall away until closer to a 70% rate. But what does this imply in terms of moral hazard? Can you imagine anyone suggesting welfare payments should be more generous, so as to stop the incentive to cheat? Me neither. The answer to the Laffer effect is to beef up tax inspection, ban any dealing with tax havens and stop letting companies duck taxes they owe on income earned here.

This week the government abolished the Agricultural Wages Board, covering 140,000 farm workers who will now no longer be entitled to sick pay and three extra days' holiday and, according to the Financial Times, "many will see their pay drop sharply". Inside the London bubble, this government, with its mainly comfortable constituencies, is insulated from the squeezed incomes and the brutality of many of its cuts.

So if we are in for even more torrid times, is there any hope that the pain will be shared any more fairly than it has been so far?